An Â£870,000 IT project to share driver data between the DVLA and motor insurers is floundering over who will bear the costs, according to MPs.

The Industry Access to Driver Data (IADD) project, which began in 2009, was designed to allow insurers to query DVLA records of driver licence information to decide whether to sell insurance to prospective customers, based on licensing information.

The project, which cost Â£870,000 between 2009 and August 2011, has run up against the buffers of cost negotiations between the government and insurers, roads minister Michael Penning told the House of Commons on Thursday.

He reports:

The data-sharing project is designed to close a “loophole” that allows people driving without a licence to take measures to avoid detection by the police, Penning said in the debate. Automatic Number Plate Recognition (ANPR) technology, used by the police to scan car number plates, shows whether a particular car is insured, and has an MOT and a registered owner. ANPR does not show whether the registered owner has a valid licence, said Penning.